The Influence of Unemployment on the Level and Rate of Company Formation in Scotland, 1950–1984

In this paper annual time-series data are used to examine the relationship between unemployment and both the level and the rate of new company registrations in Scotland between 1950 and 1984. Lagged unemployment rate and changes in this rate (also lagged) are shown to explain in excess of 90% of the yearly variation in registration activity. The results indicate the importance of those factors, for example, unemployment or the threat thereof, which act to ‘push’ individuals into self-employment.